Negative externalities

Negative externalities are when someone does something that causes damage to someone else but they don't have to pay for it. For example, if someone builds a factory near someone else's house and that factory pollutes the air, then the people living near the factory might get sick from the pollution. In this case, the people living near the factory didn't get to choose to have the factory built near their house, but they have to pay for it by living in bad air. That is a negative externality.